Thinking about the transfer of wealth raises plenty of questions, especially if you’re not used to dealing with investments. Families often wonder what happens to shares of stock when a loved one passes away. 

Can those investments be passed down like other assets? Can you inherit stocks directly, and if so, what should you do with them?

At Heritage Wealth Retirement Planning, we believe that financial clarity matters for families at every stage of life. If you’d like to talk through your situation with a financial professional, call us at (630) 868-9127.

Answering The Question: Can You Inherit Stocks From a Family Member?

The short answer is yes. Stocks are considered personal property, and like other investments or accounts, they can be passed from one generation to the next. 

If someone owned individual shares in a brokerage account, those stocks may transfer directly to heirs, depending on how the account was set up. If the account had a beneficiary designation or transfer-on-death instruction, the process is often more straightforward.

Inheritance doesn’t mean you’re required to keep the stocks. Once they transfer into your name, you usually have the option to hold them, sell them, or restructure them as part of your overall financial plan. 

The key is understanding the rules around ownership transfer, potential taxes, and what each choice could mean for your future.

How the Inheritance Process Typically Works

When people ask, “Can you inherit stocks just like other assets?” they’re really asking how the actual transfer happens. Here’s what usually takes place:

1. Verification of Ownership – The executor of the estate confirms what assets are held, including brokerage accounts and stock certificates, if any exist outside a broker.

2. Beneficiary Instructions – If the deceased had a beneficiary listed on an account, the brokerage works directly with that person to transfer ownership.

3. Probate Process – If there are no direct designations, the estate often goes through probate. The court oversees the distribution of stocks along with other property.

4. New Account Setup – Inherited shares may be moved into a new account under the heir’s name, usually at the same brokerage.

5. Transfer Completion – Once the process is finalized, the heir becomes the legal owner and can decide whether to keep, sell, or adjust the investment.

This process can be straightforward or more complex, depending on the paperwork in place. Having transfer-on-death instructions or trusts can significantly speed up the process.

Step-Up in Basis: Why Taxes Matter

A major reason people ask, “Can you inherit stocks without a huge tax bill?” is because of capital gains rules. Fortunately, U.S. law often provides what’s called a “step-up in basis.”

Here’s what that means:

• If your parent bought a stock decades ago at $20 per share and it’s now worth $100, selling it during their lifetime would have triggered a hefty capital gains tax.

• But if you inherit that stock, your cost basis resets to $100—the value on the date of their passing.

• If you sell the stock right away, there may be little to no capital gains tax due.

This step-up can save heirs a significant amount in taxes. It’s one of the reasons inherited assets are treated differently from gifted assets, which don’t always receive the same benefit.

Deciding What to Do After You Inherit

Once the stocks are legally yours, the decision shifts from process to planning. Here are common choices heirs face:

• Hold the Investment – You may decide to keep the shares as a long-term part of your portfolio. This can be meaningful if the stock has sentimental value, or if you believe in the company’s long-term performance.

• Sell the Shares – Others prefer to sell, either to simplify their investments or to use the money for immediate needs.

• Diversify – Sometimes, selling part of the position and reinvesting across multiple holdings helps reduce risk.

• Integrate With Retirement Planning – If you’re already working on retirement goals, inherited assets can strengthen your income or growth strategy.

There’s no single correct answer. The decision depends on your timeline, financial goals, and comfort level with investing.

Situations That Can Change the Process

While many inheritances follow a similar pattern, some situations can affect how stocks transfer:

• Joint Accounts – If the stocks were held in a joint account with rights of survivorship, ownership usually passes automatically to the surviving account holder.

• Trusts – If stocks were held in a trust, the trustee follows the instructions outlined in that document.

• Employer Stock Plans – Shares held inside workplace plans may follow different rules, especially if retirement accounts are involved.

• International Investments – If the stocks were purchased through a foreign broker, additional rules may apply.

Understanding which category applies is vital because it affects both timing and taxes.

Why Professional Guidance Matters

On paper, the process of inheriting stocks may sound straightforward. But in practice, families often face questions like:

• Should I keep the shares or cash them out?

• How do I handle multiple beneficiaries inheriting the same stock?

• What if I want to move the shares to a different brokerage?

• How will this impact my retirement strategy or tax return? 

Talking with a financial professional helps turn those questions into clear decisions. At Heritage Wealth Retirement Planning, we work with families to review inherited assets, explain your options, and show how they fit into your broader financial picture.

How Inherited Stocks Fit Into Retirement Planning

Stocks passed down to you can play an essential role in your long-term strategy. Here’s how they may connect to retirement planning:

• Boosting Investment Accounts – Adding inherited shares to your retirement portfolio can accelerate growth.

• Creating Income Streams – Dividend-paying stocks may provide ongoing income in retirement.

• Supporting Tax Planning – Coordinating the sale of inherited shares with your broader tax strategy can reduce unnecessary costs.

Adjusting Risk Levels – If you’re close to retirement, it may make sense to rebalance inherited stocks into more stable investments.

Take the Next Step

So, can you inherit stocks? Yes, and what you do next can make a big difference in your financial life. Inherited investments can be a helpful gift for your future, but they come with decisions that deserve thoughtful attention.

If you’d like to talk through your options, call (630) 868-9127 today or visit the Heritage Wealth website to schedule a consultation. We’re here to help you make sense of your inheritance and build a financial plan that feels right for you.